Search Site
Menu
Proposed SEC Rule Could Damage Whistleblower Program

The Securities and Exchange Commission (SEC) whistleblower program has been an undeniable success since its launch, leading to millions of dollars’ worth of awards to several dozen whistleblowers in that time.

Now, the agency has proposed several amendments to the program that have drawn some controversy, as they could implement limits on the size of awards whistleblowers can earn from successful enforcement actions resulting from their “unique” and “actionable” information.

Changes coming to whistleblower program?

Under the program as it currently exists, whistleblowers who provide information that helps the SEC bring a successful enforcement action can receive 10 to 30 percent of the agency’s recovery. This serves as an additional incentive for whistleblowers to come forward with what they know, especially those who have knowledge of large-scale fraud that could result in particularly valuable awards.

Under the new rules, the Commission would have the power to reduce or enlarge awards depending on a variety of factors. This would be beneficial for people who would otherwise earn less than $2 million, which accounts for about 60 percent of the awards handed out so far. However, for awards of more than $30 million, this could result in reduced payments, based on an analysis of “the value of the whistleblower’s information and the personal and professional sacrifices made in reporting the information.” This adds some subjectivity to a process that has been largely objective—what metrics would the Commission determine merit in such circumstances?

Of course, a whistleblower would still be earning a significant amount of money even with a reduced payment, but those against the amendment are wary of taking anything away from what a whistleblower could potentially earn, as lower payments could take away from their incentive to report.

It remains to be seen whether or not the SEC will actually enact these proposals, but given the massive success the program has had so far, it seems ill-advised to make such major changes. For more information about how to make a whistleblower report through the SEC, speak with an experienced attorney at Kardell Law Group.

Honors
Our Office
  • Dallas Office
    4514 Cole Ave
    #600
    Dallas, Texas 75205
    Phone: 214-306-8045
    Fax: 469-729-9926
Testimonials
  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

  • "Never thought my career would end like it did after 30 years of service. I was part of the first round of the so called reduction of force. I asked myself how can I be part of this with 30 years of seniority. How did they pick these 90 plus employees? Now, the culture of this organization made you question every decision they made. It wasn’t what you knew it’s was a culture of who you know. Nonetheless, I did not accept their severance package. I immediately starting looking for an attorney who would take on my case. After the initial call to Steve I had hope again. He was open and honest about everything and reassured me he would do his best for me, and he did. I had an awesome outcome. Thanks Steve you’re the best."  -S.S.

  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

FOLLOW US
Facebook Twitter Linkedin RSS Feed JD Supra